Emerging Issues in Procurement

Topics: Procurement, Supply chain management, E-procurement Pages: 7 (2401 words) Published: July 2, 2012
According to Kenneth lysons and Brain Farrington, procurement and supply chain management, procurement is the acquisition of goods and services in return for a monetary or equivalent payment. Procurement however, is the process of obtaining goods and services.(http://en.wikipedia.org/wiki) Emerging issues are issues that are coming up to improve on the purchasing process. The following are some of the issues, Out sourcing, E procurement, Group/consortium purchasing , purchasing card and Green procurement/purchasing. Out sourcing, is the management strategy by which major noncore function are transferred to specialist, efficient, external service providers This is normally done after negotiating on a contract agreement with a vendor who takes on the responsibility for further production process, people management, service and key asset management. Examples of the services include, security, catering and human resource. Some of the advantages associated with outsourcing include,

Cost saving, The lowering of the overall costs services to the business which will involve reducing the scope of defining quality levels, repricing, negotiation and cost restructuring Improving quality: Achieving a sleep change in quality through the contracting out the service with new service level agreements. This is achieved as usually contracted companies want to perform to their best to appease their boss. Increased Flexibility, (adjustment) by focusing on the supply chain functions, major service providers can offer greater flexibility across a wider international market. This is done by focusing on the activities that the company can do best. Core competencies, it enables the organization to focus on core competencies and those not requiring direct control. Despite the benefits outlined above, outsourcing can present many problems as stated below. Poor service delivery, This is in most cases due to poor contract selection and lack of commitment. Usually outsourced companies want to save money and this is seen in using poor quality or cheap means of production to save money hence leading to poor delivery. Poor quality services, unless the contract specifies measurable cost for quality. There might be poor service quality experience, Organizations due to the desire to save money usually award contracts to cheap companies because they are willing to do the job cheaply but this in return costs the company due to low quality. Lack of management skills to control the suppliers, since there is no or limited supervision, the service providers will work according to their own principles neglecting the terms of the contract. This in turn leads to poor service delivery. E-procurement, this is the online network of supply and service providers used by the business to business eco-commerce or economic sectors. Examples include, E-information which is the gathering and distributing of purchasing information from internal and external entities Cost savings is hailed as the primary advantage of e-procurement. Once a company has invested in the software necessary to facilitate online buying, employees can purchase goods electronically that have been pre-approved by their corporation. Companies may purchase from catalogs hosted internally by the company, use external supplier catalogs, or both. The cost of implementing the system will vary depending on the degree of versatility a company desires in the e-procurement process. One type of e-procurement bands several companies within a particular industry together to position themselves to gain greater leverage in buying power and negotiation for cheaper prices. These e-procurement "marketplaces" are often specific to a particular industry. One type of typical e-Procurement conglomerate is called a "buying group". Healthcare providers, for example, often initiate and recruit members into buying groups to purchase their equipment at lower prices online. Healthcare equipment suppliers also compete as vendors...

Bibliography: Kenneth lysons and brain farrington. Principles of purchasing and supply chain management 7th Edition
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